North Sydney is throwing down the gauntlet to the Sydney city and Parramatta markets as the fastest-growing office precinct following the completion of close to $1 billion in sales over the past week.
North Sydney is close to 94 per cent full and potential tenants are now fighting for the prime spots.
Office construction is continuing in the highly sought after area with new towers at 1 Denison Street, the new home of the Nine Entertainment Co, the owner of this publication, and the metro rail at the nearby Victoria Cross Station.
The latest deal was by Abacus Property which snapped up a tower at 99 Walker Street, North Sydney from Oxford Properties for $311.1 million, which equates to $16,000 per square metre. The main tenants are Jemena Gas, General Electric and a Coles supermarket.
Abacus Property managing director Steven Sewell said one of the attractions of the 21-storey property was its location midway between the North Sydney railway station and the new metro rail station being built by Lendlease, which is scheduled for completion in 2024.
“This transaction aligns with our strategic priority of acquiring assets in specific locations where we see amenity and infrastructure improvements that we believe will translate to strong tenant demand,” Mr Sewell said.
The deal, which exchanged unconditionally, was negotiated by Knight Frank’s Tyler Talbot, Graeme Russell and Dominic Ong and Cushman & Wakefield’s Josh Cullen and Mark Hansen.
Mr Talbot, partner, institutional sales, Sydney Metro said the sale “further cements the strength of the North Sydney market and demonstrates how the rise in amenity and infrastructure is becoming increasingly attractive when compared to the Sydney CBD”.
The Abacus deals follows the purchase by CBRE Global Investors of the Zurich building at 118 Walker Street for $350 million and Stockland’s deal to buy 118 Walker and 122 Walker Street for a combined value of $121 million.
In it most recent report on the North Sydney office market, Colliers said demand in North Sydney had increased markedly in the second half of the year after the first half was impacted by occupiers hesitant to make decisions.
Anneke Thompson, national director research at Colliers International, said North Sydney’s prime grade existing buildings grew in value by an average of 5.7 per cent year on year, while for new prime grade buildings, values grew by 7.7 per cent, to about $580 per sq m.
On the leasing front, OohMedia has committed to 6000 sq m at 73 Miller Street. This building is being refurbished and due for completion in May 2020, which will add an additional 12,000 sq m to the market.
“We forecast vacancy to reduce to sub 7 per cent by January 2019 on the back of stronger leasing conditions in the second half of 2019,” Ms Thompson said.
“Demand has picked up particularly in the whole floor 1000 to 1300 sq m market, and due to recent leasingactivity, tenants now have very limited options available to them.”
Source: Thanks msn.com